Markets rally on firm auto sales in August

MUMBAI: Equities markets rallied on Friday despite weak June quarter economic growth data as brisk auto sales and an unexpected increase in August manufacturing output boosted investor sentiment.

BSE Ltd’s benchmark Sensex climbed 161.74 points or 0.51% to end the day at 31,892.23, while the National Stock Exchange’s broader Nifty index inched close to the 10,000 mark, closing at 9,974.40, up 56.50 points or 0.57%.

Data released on Thursday showed that gross domestic growth in April-June grew at the slowest pace in three years.

“Despite weak Q1 GDP growth of 5.7%, the market continued to stay on a positive terrain due to better auto sales and encouraging manufacturing data for the month of August,” said Vinod Nair, head of research at Geojit Financial Services Ltd.

“On the other hand, investors are expecting knee-jerk reaction from the government to uplift the growth and they are largely focusing on long-term benefits from GST than transitory hiccups,” he added.

The Nikkei/Markit Manufacturing Purchasing Managers’ Index rose more than three points to 51.2 in August from 47.9 in July, its biggest one-month jump in five-and-a-half years.

Among sectoral indices, BSE Auto rose 1.94% after auto firms reported healthy sales data for August as festive buying drove consumer demand.

Maruti Suzuki India Ltd, the country’s largest car maker, reported an increase of 23.8% in total sales at 163,701 units in August as against 132,211 units a year ago.

Sales at Tata Motors Ltd jumped 13.64% to 48,988 units. Domestic sales of commercial and passenger vehicles improved 25.74% to 45,906 units on growing demand across segments and positive customer sentiment, the company said.

Though Indian markets have been in a continuous surge this year, a bout of selling in August weighed on sentiment. Emerging markets outperformed globalindicesin Augustwhen the Indian markets saw selling by foreign investors.

The Sensex and the Nifty fell 2.41% and 1.58% respectively, while the MSCI Emerging Markets gained 2%, MSCI India was down 0.89%.

So far this year, the Sensex has gained 19.17% and the Nifty 21.16%. The MSCI Emerging Markets index is up 26.14%, while the MSCI India index is 27.41% higher and MSCI World is up 11.91%.